Herbert Ungerer

Adviser DGCOMPEuropean Commission

ACCESS ISSUES UNDER EU REGULATION AND ANTI-TRUST LAW

- THE CASE OF TELECOMMUNICATIONS AND INTERNET MARKETS

Conference, June 23-24, 2000, Washington D.C.

Panel on Substantive Comparative Antitrust Issues in Japan, the US and the European Union

COMPETITION POLICY IN THE GLOBAL TRADING SYSTEM :

PERSPECTIVES FROM JAPAN, THE UNITED STATES AND THE EUROPEANUNION

The University of Oklahoma College of Law and The Center for Global

Partnership - The Japan Foundation

2EXECUTIVE SUMMARY

Access has become a key issue for regulation and antitrust in the Internet age. Quite contrary to much of

the beliefs of Internet libertarians who count on low costs of entry and a robust competitive

environment, many segments of the new Internet-based economy could develop, driven by the

requirement in many instances to show world-wide presence to reach scale economies, towards

structures controlled by highly dominant enterprises. This paper reviews three issues which in the view of

the author are fundamental to driving theory and practice with regard to access to telecommunications and

the Internet in the European Union : it reviews the current EU framework of access and interconnection to

the basic layer of Internet access, the telecommunications network ; it takes then a closer look at the recent

changes of the system, even if the current reform process is still not concluded ; and it discusses as a third

issue access and control of the Internet and the concept of "top-level Internet connectivity" which has

lately become central in this context.

I) INTRODUCTION

Access has become a central issue for regulation and antitrust in the Internet age1. Firstly, the new

communications infrastructure is, by definition, a layered system2, on top of which e-based transactions —

1 The author is currently Visiting Fellow at the Weatherhead Center for International Affairs, Harvard University, and

Adviser to the Directorate General for Competition, European Commission. The statements put forward in thispaper are solely the author's responsibility and do not represent positions by the European Commission. He can bereached at ungerer@cfia.harvard.edu.

The paper is written from a European perspective, with occasional references to US and Japanese situations. Thanks are due to the Weatherhead Center's Fellows Programme for support, and to Anthony G.Oettinger and JohnC.B. LeGates, Program on Information Resources Policy, Harvard University, for review and discussion. Specialthanks are also due to Donald Halstead for editing remarks on this version.

2 The Internet has been defined as follows : " The 'Internet' refers to the global information system that (i) islogically linked together by a globally unique address space based on the Internet Protocol (IP) or its subsequentextensions / follow-ons ; (ii) is able to support communications using the Transmission Control Protocol /Internet Protocol (TCP/IP) suite or its subsequent extensions / follow-ons and /or other IP compatible protocols ; and (iii) provides uses or makes accessible , either publicly or privately, high level services layered on the

3commonly called e-commerce — take place. Essential layers of this new infrastructure are either still

under bottleneck control or threaten to fall under such control, local telecommunications access being an

example of the first, access to "top-level Internet connectivity" of the second. Both are discussed in this

paper.

The shift of the economic base to a networked-based economy on a broad scale — the essential

characteristic of what has come to be called the New Economy — is for the first time making markets

global in real terms. In essence this means that economic activities — and potential anti-competitive

behaviour — not only become more difficult to regulate and check in the different geographical markets

and jurisdictions, but that the behaviour itself and its possible anti-competitive effects can only be judged

by appreciating it on a global level. This means a new challenge for cooperation between regulators and

antitrust authorities at a global level. At a more profound level, it also implies the requirement for re-

appreciating the adequacy of institutional arrangements for dealing with these issues.

There have been suggestions that the New Economy implies a fundamental change in the operation of

competitive markets and the principles that describe the behaviour of economic agents in such markets

and which are at the very basis of antitrust.. "The way companies buy and sell is changing. The way they

collaborate is changing. And these are scale businesses ; they do tend to be 'winner takes most'.

Information, transactions, tend to accrue to the No 1 player in the market, whether it is because they set

the standards or they have critical mass." 3 Or in even stronger terms : "the constant pursuit of that

_________________________________________________________________________________(cont'd)

communications and related infrastructure described herein." See Barry M.Leiner, Vinton G. Cerf, David D. Clark,Robert E. Kahn, Leonard Kleinrock, Daniel C. Lynch, Jon Postel, Larry G. Roberts, Stephen Wolff, "All About theInternet : A Brief History of the Internet", at 16, Federal Networking Council, Resolution 10/24/1995, InternetSociety (ISOC), available at <http://www.isoc.org/internet-history/brief.html>.

This technical definition requires explanation in economic and market terms. See infra, in particular chapter IV.

3 Ken Fox, Internet Capital Group, quoted by Alan Murray in "For Policy Makers, Microsoft Suggests Need toRecast Models", Wall Street Journal, 9 June 2000. Available at <http://interactive.wsj.com> .

4monopoly power becomes the driving thrust of the New Economy. And the creative destruction that

results from all that striving becomes the essential spur of economic growth."4

By the end of 1999, some 260 million users were connected worldwide to the Internet , out of which there

were 111 million in the United States, 65 million in Europe, and 18 million in Japan5. This means that at

this stage nearly three-quarters of Internet use is accounted for by the triad US, Japan, and European

Union.

In a world increasingly determined by network effects and the related externalities6 it is not astonishing that

major recent antitrust cases have been dominated by this issue. In the major antitrust case currently dealt

with in the U.S., the issue of Internet access software has been critical. In the EU, the debate on local

access to the telephone networks has become a major element in the European Commission's overall drive

for developing the Internet economy.7 In EU antitrust, the issue of access to "top-level Internet

_________________________________________________________________________________(cont'd)

4 Treasury Secretary Lawrence H. Summers in "The New Wealth of Nations", Remarks at Hambrecht&QuistTechnology conference, San Francisco, 10 May 2000. Available at<http://www.ustreas.gov/press/releases/ps617.htm>

5 Cyber Atlas : "Internet Statistics and Market Research for Web Marketers", available at<http://cyberatlas.internet.com> .

6 [Positive] externalities are the benefits that accrue to parties other than the parties that produce them. See Paul R.Krugman, Maurice Obstfeld, International Economics, Theory And Policy (Reading, Massachusetts : Addison-Wesley-Longman Inc., Fifth Ed. 2000), 280 : Technologies and Externalities.

A network externality "is the benefit gained by incumbent users of a group when an additional user joins thegroup. The group can be thought of as a 'network' of users, hence the term network externality. When theeconomic benefit of an additional user is positive, it is a positive network externality", Lee W. McKnight, JosephP. Bailey (eds), Internet Economics (Massachusetts Institute of Technology, fifth printing 1999), 6. As aconsequence, industries with network externalities are characterised by positive critical mass , i.e. users preferlarge networks in order to reap the benefits offered by network externalities, and networks of small sizes cannotattract a sufficient number of users. The Internet exhibits strong positive externalities. See J. Gong and P.Srinagesh, "The Economics of Layered Networks", in Lee W. McKnight, 66, supra. and the discussion inChapter IV.

7 "Europe — an Information Society For All" , Communication on a Commission Initiative for the Special EuropeanCouncil of Lisbon, 23 and 24 March 2000, available at <http://www.europa.eu.int>.

5connectivity"8 has been the subject of two major cases over the last two years. In Japan, the issue of local

access and interconnection to the NTT network and the conditions attached to it has been a continuing

theme in the domestic market, and in its trade relations.

It is against this background that this paper will review three issues which in the view of the author are

fundamental to driving theory and practice with regard to access to telecommunications and the Internet, at

least in the European Union9 :

- the paper will discuss as a first case the current framework of access and interconnection to the

basic layer of Internet access, the telecommunications network. This will give opportunity to

discuss in particular the current relationship of sector-specific telecommunications regulation, as it

has been built in the EU since full liberalisation of the sector on 1 January 199810, and EU

8 See infra, Chapter IV.

9 Given the close relationship of the approach taken under the EU's regulatory framework on telecommunicationsaccess with the so-called Regulatory Annex (also known as the "Reference Paper") developed in the context of theWorld Trade Organisation (WTO) negotiations on the WTO Basic Telecommunications Agreement (subsequentlyintegrated by the EU, as well as the US, Japan and other countries, into their commitments under that agreement),many of the issues discussed in this paper will emerge in all three jurisdictions, though in different forms, given thedifferent set-up of sector regulation and antitrust law in these jurisdictions.See Legal Texts and Commitments, GATS [General Agreement on Trade in Services], Commitments by Sector,Communications Services — Telecommunications Services and "Additional Commitment by the European CommunitiesAnd Their Member States", available at <http://gats-info.eu.int/gats-info/g2000.pl>.

10 The EU framework for telecommunications consists, roughly speaking, of the so-called sector-specific ONP("Open Network Provision") framework operated by the European Commission and the "National RegulatoryAuthorities" (NRAs) of the 15 Member States of the EU, and EU competition law applied by the EuropeanCommission and the national competition authorities and the national court system.

Corresponding authorities in the US are the Federal Communications Commission and the US antitrust system. InJapan they are the Ministry for Posts and Telecommunications (MPT) and the Japanese Fair Trade Commission. Fora recent comparative analysis of telecom regimes in the United States, Japan, the EU, Canada, Australia, NewZealand, and other telecommunications markets see Dianne Northfield, The Information Policy Maze: Global Challenges— National Responses (Melbourne : RMIT University Press, 1999).

The EU telecommunications sector was liberalised by a series of measures (liberalisation directives issued under EUcompetition law, Art. 86 of the Treaty Establishing the European Community [former Art. 90, as renumbered by theAmsterdam Treaty] ) and harmonisation Directives issued by the European Parliament and the Council on the basisof Art. 95 TEC (former Art. 100a).

The measures culminated in the adoption by the European Commission of the Full Competition Directive,

6antitrust law.

- in the second part, a closer look will then be taken at the recent changes to this system, even

though the current reform process is still not concluded.11 A major aspect of the current reform is

the recognition that the new environment outdates a number of traditional sector regulatory

concepts and requires more reliance on, and integration of, competition law approaches12, in

particular those concerning concepts of dynamic market definitions, in order to deal effectively

_________________________________________________________________________________(cont'd)

Commission Directive 96/19/EEC, full competition in telecommunications markets, OJ L 74/13 (1996) mandatingfull liberalisation of telecommunications in the EU on 1 January 1998. Five Member States were allowed varioustransition periods under special Decisions by the Commission under Art.86, the last deadline (Greece) ending on 31December 2001.

The EU Full Competition Directive was of similar importance for the European market as the enactment byCongress of the Telecommunications Act of 1996.

For a recent comparison of telecom deregulation in Europe and the United States, see Viktor Mayer-Schoenbergerand Matthias Strasser, "A Closer Look At Telecom Deregulation : The European Advantage", Harvard Journal of Law& Technology (forthcoming).

11 The Commission has carried out a series of reviews of the sector, essentially aiming at taking account of changesrequired by convergence of markets and the Internet. The recent review process started with "Green Paper on theconvergence of the telecommunications, media and information technology sectors and the implications forregulation", COM(1997)623 , and a series of subsequent communications by the Commission. It culminated with theCommission's issue of "Towards a New Framework for Electronic Communications Infrastructure and AssociatedServices : The 1999 Communications Review", COM (1999)539, and "The Results of the Public Consultation onthe 1999 Communications Review and Orientations for the new Regulatory Framework", Communication from theCommission, COM(2000)239 on 26 April 2000. Available at <http://www.europa.eu.int/comm/information_society/policy/telecom/index_en.htm>.

On the basis of the orientations, the Commission adopted on 12 July 2000 a package of legislative proposals. See"Commission proposes overhaul of rules for electronic communication", European Commission press releaseIP//00/749, 12 July 2000. Available at <http://europa.eu.int>.

For a general discussion of convergence, see also P.H. Longstaff, "New Ways to Think About the Visions Called'Convergence': a Guide for Business and Public Policy" (Unpublished Draft Report), Program on InformationResources Policy, Center for Information Policy Research, Harvard University. Available at<http://www.pirp.harvard.edu>.

12 Similar issues are arising in other jurisdictions. Compare William H. Read, Ronald A. Weiner, "FCC Reform :Does Governing Require a New Standard", Program on Information Resources Policy, Center for InformationPolicy Research, Harvard University (1999), where the authors suggest that the FCC should "adopt a publicinterest standard that incorporates procompetitive antitrust principles". Available at<http://www.pirp.harvard.edu>.

7with access issues in the future.

- the third issue discussed in this paper concerns the development of the concept of "Internet

connectivity" and access to it, as it has emerged in Europe, notably on the basis of the

investigation and decision in 1998 on Worldcom/MCI13. This investigation became a key step in the

competitive analysis of Internet access and Internet control. The case developed for the first time

in Europe a coherent system of market definitions taking full account of the network effects

fundamental in the Internet age, notably, the concept of a global market for "top-level Internet

connectivity".

Within the framework of its overall political goals, as expressed at the Lisbon European Council in March

2000, access to the new communications structures in the Internet age is of fundamental importance for

the European Union. It is also a major measure that the European consumer applies in his appreciation of

the success of European policies, and in particular EU antitrust policies. As European Competition

Commissioner Monti declared on the occasion of the opening of the Competition Day 2000 "opening

up the telecommunications sector to competition has cut telephone charges in some cases by up to 35%,

increased the range of services provided and created new jobs" . This statement emphasizes the basic

message that "European citizens have everything to gain from competition policy".14

13 99/287/EC: Commission Decision of 8 July 1998 declaring a concentration to be compatible with the common

market and the functioning of the EEA Agreement (Case IV/M.1069 - WorldCom/MCI), OJ L 116, 4.5.1999,p. 1 -35.Available at <http://www.europa.eu.int/comm/dg04/merger/closed/en/dec98.htm>.

14 See "Mario Monti Launches 'Competition day' in Lisbon on 9 June", European Commission press releaseIP/00/590, 8 June 2000See also XXIXth Report on Competition Policy — 1999, SEC(2000)720, 5 May 2000, Commission of the European Communities, and Foreword.Available at <http://www.europa.eu.int/comm/dg04/annual_reports/1999/>.

8II) THE DUALITY OF SECTOR REGULATION AND ANTITRUST LAW : THE CURRENT

EU APPROACH FOR ACCESS TO TELECOMMUNICATIONS NETWORKS

Since the inception of EU telecommunications liberalisation in 1987,15 a comprehensive framework of

sector-specific regulation has developed, both at EU level as well as at the EU Member State level (the

EU ONP framework).16 In parallel, it is the sector where the European Commission has to date

developed the most consistent position concerning the application of EU Competition Law to

bottleneck access, with the adoption of the "Access Notice" 17.

15 With the publication by the European Commission of "Towards a Dynamic European Economy : Green Paper on

the Development of a Common Market for Telecommunications Services and Equipment", COM(87)290.

16 The history and development of telecom markets and regulation in the European Union are extensively coveredelsewhere. See for example Herbert Ungerer, "EC Competition Law in the Telecommunications, Media , andInformation Technology Sectors", International Antitrust Law & Policy, Fordham University School of Law, 1995Fordham Corp. L. Inst. 000(B. Hawk ed.1996).

EC telecommunications liberalisation developed mainly as a consequence of three factors. First, by the end of theeighties, the growing digitisation of European telecommunications networks began to transform them intomultipurpose information infrastructures. The opportunities offered by telecommunications networks and servicesstarted to extend into markets substantially beyond the traditional telephone service, particularly the so-called value-added-services — the precursors of today's Internet services and ISPs (Internet Service Providers). As a result, access to the traditional monopoly networks in the telecommunications sectors became a major issue in all EUMember States, and there was a growing conviction that without a loosening of monopoly rights — and aconsequential definition of access conditions — it could neither be assured that new markets could develop, northat the new services offered could be made available to consumers. Secondly, in British Telecommunications ( Case C-41/83 (1985) ECR 873,(1985)2 CMLR 382), the European Court of Justice confirmed that EU Competition Rulesapplied to the telecommunications sector. Thirdly, the impact of developments in the United States, in particularthe AT&T divestiture consent decree and the resulting transformation of the US market, began to be felt in Europe. At the same time the progressive deregulation of the telecommunications sector and the privatisation of BritishTelecom in the United Kingdom since 1982 made Europe more receptive to the concept of market deregulation. The combination of these factors led the Commission to issue, in 1987, its Telecommunications Green Paper (supra), which set forth a comprehensive policy framework for EU action in the telecommunications sector. TheGreen Paper envisaged a number of changes in EU telecommunications leading towards progressive liberalisation. Most notably in the context of this debate, already at the time of the Green Paper, definition of harmonised accessconditions (the "Open Network Provision" or "ONP" concept) became central. By 1993, an EU Telecom Review led to an agreement on the full liberalisation of the EU telecommunicationsmarket by 1 January 1998 , including the remaining public voice telephony and telecommunications networkinfrastructure/facilities monopolies. The 1993 Review led, inter alia, to an agreement by the EC Council to adjust the ONP framework to fullyliberalised market conditions and to establish a regulatory framework for interconnection and access to services andnetworks.

17 Notice on the application of the competition rules to access agreements in the telecommunications sector (OJ C

9

With the development of this framework, both sector regulation and antitrust became, in a

complementary manner, the two pillars on which the regulatory framing of the development of the

sector was based18.

In the course of implementing the telecommunications policy concept, the application of EU

competition law was of primary importance from the very beginning19. Access and its relationship to

Competition Law figured centrally on the sector agenda as early as British Telecommunications, often called

a legal cornerstone of the EU telecommunications framework. Already in British Telecommunications the

European Court of Justice hinted at a number of main issues in access which were only fully worked out

subsequently : the Court confirmed the requirement to give access to a "value-added" service provider,20

_________________________________________________________________________________(cont'd)

265, 22.8.1998, p. 2 ), hereafter referred as the Access Notice. Available at <http://www.europa.eu.int/eur-lex/en/index.html>. The introduction to the EU's access and interconnection framework in this chapter is partly based on an articlewritten by the author in connection with "Third Competition Law Annual 1998 : Regulating CommunicationsMarkets" (eds. Claus Dieter Ehlermann, Louisa Gosling : Hart Publishing, Oxford, forthcoming in July 2000).

18 This situation is not dissimilar to the basic regulatory approach in the two other jurisdictions, particularly the UnitedStates, though emphasis has been different due to the different jurisdictional context. In the US, major startingpoints of liberalisation and competition were the FCC's Computer I and II inquiries, with a long preceding historyof gradual liberalisation since the first FCC decision on attachment of terminal equipment other than AT&T's in1956 (telephone accessory devices). On the antitrust side , the AT&T divestiture decision (consent decree)determined the competitive structure of the US telecommunications market up to the Telecommunications Act of1996 which established the basic principles for a fully competitive US telecommunications market (as did the FullCompetition Directive for the EU market).

For a recent comparative analysis, see Viktor Mayer-Schoenberger et al, "A Closer Look At Telecom Deregulation :the European Advantage", supra. See in particular their analysis of different approaches in the two jurisdictions tothe relationship between the federal and state level in the US, the EU level and the 15 Member States in Europe,which turned out to be quite decisive in determining the speed of the transformation (and the legal hurdles whichwere encountered).

19 In December 1989, a basic policy compromise defined the respective role of measures based on EU competitionlaw (Art 86, associated with application of Art 81 and 82, as well as other EU Treaty Articles), and harmonisationthrough internal market legislation based on Article 95 of the EC Treaty. The compromise reached between theCommission and the Member States on the occasion of the adoption of the Telecommunications Services Directive and theONP Framework Directive established the principle of a complementary role of liberalisation under Article 86, EUCompetition Law, and harmonisation under Article 95.

The Full Competition Directive was based on Article 86 and the associated Competition Law principles. The ONPInterconnection Directive is based on Article 95, internal market legislation.

20 Case C-41/83 (1985), supra. The case concerned the activities of certain private messaging forwarding agencies viathe BT network at the time (1982). In its decision, the Commission found that British Telecom (at that time still in

10and it also specifically addressed the issue that development of new technologies in this context was in

the public interest.

It should therefore be noted that as early back as British Telecommunications three elements emerged which

are also prevalent in the current debate on access :

- the key role of access to the network of the incumbent ;

- the issue of non-discriminatory access ; and

- the issue of the development of new technology markets / new services.

As value added services were progressively liberalised in Europe, access to bottleneck network facilities

started to become both a recurrent theme and a central issue in the telecommunications, media, and

information technology markets.

The issue of access and interconnection acquired a key role in the big alliance cases that, in the mid-

nineties, began to dominate attention in the application of EU competition law (and more generally at

the global level in antitrust) as a prelude to full liberalisation of telecoms in the EU with the Full

_________________________________________________________________________________(cont'd)

a monopoly position and in public ownership) had abused its dominant position in the telecommunications systemsmarket by taking measures to prevent certain private messaging agencies from offering a given type of service. Theservice permitted telex messages to be received and forwarded on behalf of third parties at prices lower than thosecharged by BT for its international telex service.

It should be mentioned that one of the main issues in that case was how far Article 86(2) of the EU Treaty could beapplied to exempt BT's abuse of its dominant position on the telecommunications system market by preventingaccess and the forwarding of the messages in question.

First, the Court made clear that it was for the Commission to decide (subject to review by the Court) on anyderogation to be granted from the application of the competition rules on the basis of Article 86(2) (former Art90(2)). Art 86 (2) stipulates that "undertakings entrusted with the operation of services of general economicinterest...shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far asthe application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned tothem. The development of trade must not be affected to such an extent as would be contrary to the interests of theCommunity (emphasis added).

Second, the Court made it clear that it would favour a narrow interpretation of the scope of a derogation underArticle 86(2) from obligations under competition law, in particular taking into account possible resulting delays in the

11Competition Directive of 1996 , in the United States with the adoption of the 1996 Telecom Act21, and at

the global level with the WTO agreement on basic telecom services of 1997.

Three aspects should be emphasised :

- Firstly, with EU full liberalisation and the emerging sector-specific EU framework, the

definition of access and interconnection within the ONP framework acquired more and more

importance. This was particularly refined with the adoption of the ONP Interconnection

Directive 1997.

- Secondly, under the sector-specific framework, independent National Regulatory Authorities

(NRAs) were established in all Member States, acting as a decentralised regulatory

implementation structure but within an EU-harmonised framework. 22

- Thirdly, originally due to developments in other sectors, access to bottleneck facilities began to

_________________________________________________________________________________(cont'd)

development of new technologies.21 See supra.

22 This framework was defined, inter alia, in the ONP Interconnection Directive to substantial detail. EuropeanParliament and Council Directive 97/33/EC, OJ L 199, p. 32, 26.7.1997. Available at<http://www.europa.eu.int/eur-lex/en/search.html>.

As regards the application of EU competition rules, EU competition law can be enforced both by the EuropeanCommission (under the control by the European Court of Justice) and the antitrust authorities (and courts) atMember State level, subject to the procedures established by the basic procedural Regulation 17 (Council RegulationNo17, implementing Articles 81 and 82 of the Treaty, OJ 13, 21.2.1962, p.204., and subsequent Notices).The current reform process of Regulation 17, which implies a fundamental reform of the procedural provisions ofEU competition law, emphasises further decentralisation of enforcement to national antitrust authorities, as far asprocedures following Regulation 17 are concerned (i.e. excluding procedures falling under the EU MergerRegulation (Regulation (EEC) No 4064/89 as amended), and state aids). The aim is to increase efficiency ofenforcement through decentralisation from EU level to Member State level.See "White Paper on modernisation of the rules implementing application of Articles 85 [now 81]and 86 [now82]of the EC Treaty", Commission programme No 99/027, 28.4.1999. Available at <http://www.europa.eu.int/comm/dg04/entente/en/wb_modernisation.pdf>.

12be defined more explicitly as an essential facilities concept in the context of EU competition law, in

particular under Article 82. This concept found its current, most explicit formulation in the Access

Notice, which drew its conclusions from a broad range of Commission decisions on access to

bottlenecks under Competition Rules, and from Court Rulings in this context.

It is worthwhile taking a quick look at the relationship of the working of sector-specific regulations

under the ONP framework and general Competition Law. This relationship is defined in substantial

detail in the Access Notice.

The Notice states that a party concerned with access to a telecommunications network or another critical

bottleneck network resource in the European Union faces essentially two main choices :

- specific national regulatory procedures now established in accordance with Community Law and

harmonised under Open Network Provision ; and

- an action under national and/or Community Law, in particular Competition Rules, before the

Commission, a national court, or a national competition authority.

In the Notice, the Commission recognises that Community Competition rules are not sufficient to

remedy all the various problems in the telecommunications sector. The (sector-specific) NRAs therefore

have a significantly wider ambit and far-reaching role in the regulation of the sector.

The ONP Directives impose on TOs (Telecommunications Operators) having Significant Market

Power23 certain obligations of transparency and non-discrimination that go beyond those that would

_________________________________________________________________________________(cont'd)

23 The concept of Significant Market Power (SMP), central in ONP, is discussed later.

13normally apply under Article 82 of the Treaty. ONP Directives lay down obligations relating to

transparency, obligations to supply, and pricing practices . These obligations are enforced by the NRAs,

which also have jurisdiction in ensuring effective competition.24

However, the Notice states that "if interim injunctive relief were not available, or if such relief was not

likely adequately to protect the complainant's right under Community Law, the Commission could

consider that the national proceedings did not remove the risk of harm, and could therefore commence

its examination of the case under EU competition rules".

The Commission may also intervene if, for example, the issue is of sufficient pan-European interest to

justify immediate action. More generally, if it appears necessary, the Commission can also open own-

initiative investigations or launch sector inquiries where it considers this necessary. 25

Summarising, in the European framework a dual system has developed concerning treatment of access to

bottleneck situations. Within the framework of sector-specific regulation of access — the ONP

framework and the specific regulations at the national levels — the NRAs can act in a substantial ex-ante

manner and mandate in substantial detail interconnection provisions concerning pricing, accounting, and

the technical details of access.

24 This is, however, subject to important caveats :

Firstly, under Community Law, national authorities, including regulatory authorities and competition authorities havea duty not to approve any practice or agreement contrary to Community Competition Law.Secondly, an efficient procedure must be in place. According to the Access Notice an access dispute before a NationalRegulatory Authority should be resolved within six months of the matter first being drawn to the attention of thatauthority. This resolution should take the form of either a final determination of the action or another form of reliefwhich would safeguard the rights of the complainant.Thirdly, there must be availability of and criteria for interim injunctive relief.

25 Under Regulation 17, the Commission could be seized of an issue relating to access agreements by way of anotification of an access agreement by one or more of the parties involved, by way of a complaint against arestrictive access agreement or against the behaviour of a dominant company in granting or refusing access, by wayof a Commission own-initiative procedure into such a grant or refusal, or by way of a sector inquiry. In addition, acomplainant may request that the Commission take interim measures in circumstances where there is an urgent riskof serious and irreparable harm to the complainant or to the public interest.

14

In the current interpretation of EU Competition Law, application of Competition Rules to access issues

is essentially limited to dealing ex-post with the abuse of a dominant position and the measures taken to

terminate such abuse. According to the Access Notice, sector-specific regulation will generally take

precedence with regard to action under Competition Law, if such sector-specific action is pro-

competitive and efficient.

In practice, this means that the current EU framework for obtaining access to telecommunications

facilities and services rests on two competing concepts for remedying anti-competitive effects resulting

from the existence of bottleneck structures :

- enforcement of access and interconnection provision under sector-specific regulation, essentially

by the NRAs at the State level, within an EU harmonisation framework ;

- enforcement of access, as far as a plaintiff party can claim access under EU competition law,

essentially under the European version of the essential facilities doctrine, as it is currently

evolving.

Under sector-specific regulation (the "ONP" framework), a general obligation to supply access is

imposed on public network operators with Significant Market Power (the "SMP" operators), principally

defined as operators with more than a 25% market share.26 This makes the SMP concept central to the

26 According to the ONP Interconnection Directive the notification (by the NRA) of an organisation as having significant

market power depends on a number of factors, but the starting presumption is that an organisation with a marketshare of more than 25% will normally be considered to have significant market power. Other factors which can betaken into account by the NRA are turnover relative to the size of the market, ability to influence market conditions,control of the means of access to end-user , international links, access to financial resources and experience inproviding products and services in the market, as well as the situation of the relevant market.

In practice, to date the traditional telephone incumbents have been notified as having SMP. Some Member Stateshave notified certain public mobile operators as having SMP, or are considering this.

15framework27.

However, it is interesting to note that the full and speedy enforcement of fair interconnection and

access under this regime was mainly achieved by combination with Recommendations ("soft

legislation"28).

A Recommendation on Interconnection Pricing established price ranges for interconnection rates across

the EU, based on the "best practice" of the three Member States with the lowest interconnect rates at

the time of the issuing of the Recommendation.

These ranges have largely determined the incumbents' interconnection offerings submitted and

approved by the national regulators in the Member States. This benchmarking of interconnection

pricing against "best practice" ("regulatory competition") has made the EU an area with some of the

lowest interconnection rates in the world market, with local access in the range of 0.5-1 Eurocents /

minute29.

Therefore, it seems that sector-specific regulation based on the ONP framework has been highly effective in

achieving rapidly low priced access to the incumbents' local telephone networks across the EU.

In major cases where procedures had been opened under Competition Rules, the Commission therefore

has tended to stay procedures where sector-specific proceedings under ONP or derived national

27 Essential articles of the Interconnection Directive in this context are : Article 4.2 : obligation to supply access ;

Article 6 : non-discrimination ; Article 7 : cost orientation ; Article 8 : accounting separation for "interconnectionservices". Available at <http://www.europa.eu.int/eur-lex/en/search.html>.

28 Soft legislation are measures non-binding on Member States under the EU Treaty : in general Recommendationsand Resolutions. See Commission Recommendation 98/195/EC on Interconnection in a Liberalised Telecommunications Market: Interconnection Pricing, as amended. OJ L 228, 15.8.1998, p.30. Available at <http://www.europa.eu.int/eur-lex/en/search.html>.

29 This combination of (binding) Directives with soft legislation was already pointing to the course taken in the currentreform. See Chapter III.

16regulations were likely to resolve the issue (see the Mobile Interconnect30 proceeding and the Accounting

Rate31 proceeding). This confirms the Commission's basic position that sector-specific regulation should

30 Mobile Interconnect proceeding : press release IP/98/707, 27.7.1998. Available at <http://www.europa.eu.int>.

In January 1998, the Commission launched an inquiry into interconnection charges between fixed and mobileoperators opening fifteen cases, i.e. one for each Member State due to growing concern about persistently highprices for mobile communications particularly for fixed to mobile calls. The objective of the Commission's Inquirywas to check whether : prices charged by the incumbent fixed network operator for terminating mobile calls into itsfixed network were excessive or discriminatory ; termination fees charged by mobile operators, which have jointcontrol among themselves over call termination in their networks, were excessive, and ; the revenues retained by theincumbent fixed network operator on fixed to mobile calls were excessive.

In the press release, the Commission concluded that at least fourteen cases warranted in-depth investigation givenpreliminary indications of possibly excessive or discriminatory prices. The fourteen cases comprised: four cases ofmobile-to-fixed termination charges by Deutsche Telekom, Telefónica, KPN Telekom (Netherlands) and TelecomItalia respectively, which would be suspended for six months in favour of action by national regulators ; two cases oftermination fees charges by mobile operators in Italy and Germany respectively ; eighcases regarding the retentionon fixed-to-mobile calls by public switched telecommunications networks (PSTN) operators Belgacom, TelecomÉireann, BT, P&T Austria, Telefónica, KPN Telekom (Netherlands), Telecom Italia and Deutsche Telekom. TheCommission would suspend the case involving BT given an on-going inquiry by the UK Monopolies and MergersCommission (MMC) on this issue (emphasis added).The approach of close cooperation with national regulators turned out to be largely successful. In May 1999, theCommission announced that it had decided to conclude the EU-wide investigation. This followed an assessment ofthe substantial price reductions of more than 80% in some cases, in response to the investigation. The Commissionrecalled that "in conducting the inquiry, launched in February 1998, the Commission co-operated closely withnational competition agencies and national regulatory authorities (NRAs) in the EU Member States." See pressrelease IP/99/298, 4.5.1999, "Commission successfully closes investigation into mobile and fixed telephony pricesfollowing significant reductions throughout the EU". Available at <http://www.europa.eu.int>.The Commission stated however on the occasion that it intended "to pursue the scrutiny of competitive conditionswithin an overall sector enquiry of telecoms on key issues, including current roaming conditions between mobileoperators."

The Commission has acted similarly in other cases. For example, in early January 1998, the Commission proceededunder Article 86, EC Competition Rules against DT's high fees concerning the provision of carrier-pre-selection andnumber portability. Given that a parallel procedure was opened before the national NRA , and that fees wereconsiderably reduced, the Commission terminated its own procedure. See press release IP/98/430, 13.05/1998"Commission terminates procedure against Deutsche Telekom's fees for preselection and number portability andtransfers the case to national authorities".

31 Accounting Rate proceeding : press release IP/98/763, 13/08/1998. Available at <http://www.europa.eu.int>.

The Commission opened procedures in the Autumn of 1997 concerning European operators with a potentiallydominant position, regarding the accounting rates (transfer prices) charged to terminate international calls. Following a preliminary assessment, the Commission announced in the press release that it appeared that "theinternational accounting rates charged within the EU by seven operators may result in excessive margins". Theseven operators were : OTE of Greece, Post & Telekom Austria, Postes et Télécommunications Luxembourg,SONERA (formerly Telecom Finland), Telecom Eireann, Telecom Italia, Telecom Portugal.

The Commission concluded that it would further investigate on the prices for international phone calls paid to theseoperators. On the occasion, the Commission stated that "the issue... may also be tackled under the ONP rules(Open Network Provision). In line with its Notice on the application of Competition Rules to access agreements in thetelecommunications sector the Commission has informed the national regulatory authorities of the findings of its firstphase of investigation. In those cases where the relevant authority will decide to pursue the issues under its ownjurisdiction, the Commission will stay its own proceedings, and assess in six months whether it should continue itsproceedings" (emphasis added).By April 1999, the Commission stated that "following the swift action by the national regulators", it could close itsinvestigation in respect of a number of the operators concerned. See press release IP/99/279, 29.4.1999,"Commission sees substantial progress in its investigation into international telephone prices". Available at<http://www.europa.eu.int>.

17take precedence where efficient procedures that can terminate the abuse exist.32

As regards mandating access to telecommunications facilities under an essential facilities approach under

EU antitrust 33, the Access Notice set out basic principles in substantial detail.

The Notice uses the expression "essential facilities" to describe a facility or infrastructure that is essential

for reaching customers and/or enabling competitors to carry on their business, and which cannot be

replicated by any reasonable means.34

32 This has however not prevented the Commission from intensifying its supervision under antitrust powers of the

most critical segments of the sector (supra). It has initiated a sector inquiry into general competitive conditions inlocal network access ("local loop"), the roaming (mobile communications) services market and the pricing of private lines. These inquiries are still ongoing. See press releases "Commission launches first phase of sectoralinquiry into telecommunications : leased line tariffs" (IP/99/786), 22.10.1999, and "Commission launches secondphase of telecommunications sector inquiry under the competition rules : mobile roaming" (IP/00/111), 4.2.2000. Available at <http://www.europa.eu.int>.

33 There have been a number of complaints concerning the refusal of access or the conditions attached to it. Anumber of these complaints were settled by action of the national regulators. This points to the success of the sectorregime set up.

There have also been commitments by the parties in a number of merger cases to provide access , in order to makethese mergers compatible with competition rules. See Chapter IV.

34 The essential facilities doctrine is a relatively recent concept under EC competition law. It derives from a line ofcases, originally in sectors other than telecommunications. See in particular : Joined Cases 6/73 and 7/73 CommercialSolvents v. Commission [1974] ECR 223 (chemicals); Commission Decision 94/19/EC of 21.12.1993, Sea Containers v.Stena Sealink (OJ L 15, 18.1.1994, p.8) / Commission Decision 94/119/EEC of 21.12.1993, Port of Rodby (Denmark)( OJ L 55, 26.2.1994,p.52) (transport); Joined cases C-241 / 91P & C-242/91P, Radio Telefis Eireann v. Commission,("Magill"), [1995] ECR, I-743. See also John Temple Lang, "Defining Legitimate Competition, Companies Duties toSupply Competitors and Access to Essential Facilities", in 1994 Fordham Corp. L. Inst. (Barry Hawk ed., 1993), 245. For a recent survey see inter alia Wolfgang Jauk, "The Application of EC Competition Rules toTelecommunications — Selected Aspects : The Case of Interconnection", International Journal of Communications Lawand Policy, Issue 4 1999/2000, pp. 57 , at <http://www.ijclp.org>.Of particular relevance for the most recent interpretation of the essential facilities concept under EU antitrust law isthe Judgment by the European Court of Justice of November 1998, Oscar Bronner GmbH&Co. KG v MediaprintZeitungs- und Zeitschriftenverlag GmbH&Co KG, Case C-7/97, where the Court defined conditions for the applicationof the principle. Available at <http://www.europa.eu.int/eur-lex/en/index.html>.For a comparative analysis of the essential facilities doctrine under US regulatory and antitrust law, and ECcompetition law under Article 82, see Venit - Kallaugher, "Essential facilities : a comparative law approach", inHawk (ed), 1994 Fordham Corp. L. Inst (1995)

It should be noted that the Additional commitments on regulatory principles by the European Communities and their MemberStates ( "Regulatory Annex" or "Reference Paper") in the context of the World Trade Organisations (WTO) BasicTelecom Agreement define essential facilities in the following manner :

"Essential facilities mean facilities of a public telecommunications transport network and service that :(a) are exclusively or predominantly provided by a single or limited number of suppliers; and(b) cannot feasibly be economically or technically substituted in order to provide a service

18

The Commission "must ensure that the control over facilities enjoyed by incumbent operators is not

used to hamper the development of a competitive telecommunications environment. A company which

is dominant on a market for services and which commits an abuse contrary to Article 86 [now Article

82] on that market may be required, in order to put an end to the abuse, to supply access to its facility to

one or more competitors on that market. In particular , a company may abuse its dominant position if

by its actions it prevents the emergence of a new product or service"35.

The Notice addresses the balance to be drawn between the rights of those requesting access and those

who have to give access, the crucial point in any essential facility concept.36

However, the basic principle to be kept in mind is that the bottleneck holder — given his dominant

position — must not act to prevent competition from emerging.

Drawing a balance at this stage, the dual regime in the EU concerning access to telecommunications

35 See Access Notice, supra

36 Main principles are (to be taken cumulatively) :- it will not be sufficient that the position of the company requesting access would be more advantageous if

access were granted. Refusal of access must lead to the proposed activities being made "either impossibleor seriously and unavoidably uneconomic".

- there is sufficient capacity available to provide access- the facility owner "fails to satisfy demand on an existing service or product market, blocks the emergence

of a potential new service or product, or impedes competition on an existing or potential service or productmarket."

- the company seeking access is prepared to pay a reasonable and non-discriminatory price and will otherwisein all respects accept non-discriminatory access terms and conditions.

- there is no objective justification for refusing to provide access, "such as an overriding difficulty ofproviding access to the requesting company, or the need for a facility owner which has undertakeninvestment aimed at the introduction of a new product or service to have sufficient time and opportunityto use the facility in order to place that new product or service on the market."

The latter expresses the delicate balance which must be found between the interest of the party seeking access(which will generally want to achieve access at low rates and according to its own requirements), and the rights of thebottleneck holder (who will focus on obtaining benefits from the investment undertaken for the development of hisown product).

19bottlenecks was highly successful as regards its basic purpose : making full EU-wide liberalisation of

telecommunications networks and services since 1 January 1998 a rapid success. The rapid

establishment of a decentralised but harmonised access and interconnection regime under the Member

States' oversight, combined with soft legislation by recommendations and the ultimate threat of

intervention under antitrust powers if sector regulation would not resolve issues, led to an effective

opening of core segments of the telecommunications network infrastructure, which was just emerging

from monopoly control. It allowed rapid development of competition in both long distance and

international services, and in the long-distance network backbone, by reassuring market entrants and

investors about access and interconnection with the incumbents dominating the networks in the local

access market. In the long distance and international markets, prices fell in some cases by a factor of 10

within two years37.

In terms of Internet access, this meant that ISPs (Internet Service Providers) could freely develop.

Competition in the long-distance backbone market implied that for the first time there were indications

of a significant development of a European-based backbone for Internet traffic.

However, by the end of 1999 it had become clear that major problems persisted :

- firstly, the ONP regime and the derived national sector-specific regimes had become highly

dependent on definitions, which implied a high degree of technicality, and therefore a high

potential for legal conflict. The regime as established is largely depending in its impact on two

concepts : the "category" within which the party seeking access and the bottleneck holder falls;

and, in particular, the SMP (Significant Market Power) determination.

37 In a number of Member States, prices fell to US price levels in the long-distance and international call markets

within that short period.

20

In a number of Member States there were threats of major conflicts concerning the

interpretation of these concepts. The questions of who qualifies as public network operator (and

therefore for the low network-interconnect rates), and who should be designated an SMP

operator (and therefore become subject to substantial regulatory scrutiny and to regulatory rate

approval) had become central.

- secondly, the issue of competition in the local access market (local loop : the "last mile")

remained unresolved, with a persistent market dominance by the incumbents with market shares

of 90% and more. In practical terms this meant that access to the Internet in Europe remained

substantially more expensive than in the United States.38 In competition terms it meant that the

development of alternatives such as cable and wireless access remained uncertain, as long as

these means were either under control of the incumbent,39 or the conditions for the full

unbundling of the local loop could not be addressed.

- it turned out during the prolonged debate on the consequences of convergence40 that the

application of the existing framework to the highly complex new markets of convergence and

the Internet was uncertain.

With the focussing of the debate in Europe on the creation of a future oriented e-environment as the

38 High per-minute-call charging for the local loop impeded ISPs from offering comprehensive and cheap flat-rate

access arrangements as available in the US.

39 On the eve of full liberalisation on 1 January 1998, nearly 60% of cable customers were served by a cable operatorwholly or partly owned by the local telecommunications incumbent.

40 Green Paper on Convergence, supra

21main engine of future growth and employment,41 the debate culminated in Spring 2000 when after a

series of consultations, the outline of a new approach seemed to develop.

41 See Conclusions of the European Council at Lisbon, 23-24 March 2000, at <http://www.europa.eu.int>.

22III) INTEGRATING SECTOR REGULATION AND ANTITRUST : THE FURTHER

DEVELOPMENT OF THE APPROACH

By Spring 2000, it had become clear that the critical issue of Internet access at the basic layer (local

telecommunications access) could not be adequately resolved in the EU within the framework

developed by then, and that the broader access issues resulting from convergence could not be properly

tackled. While the Commission continued to promote the cable42 and wireless (fixed and mobile)43

alternatives for access to the Internet as longer term options, it focussed immediate priority on opening

full access to the local networks of the incumbents. "Unbundling of the local loop aims to foster

competition in local access networks, currently dominated by incumbent operators. New entrants do not

have the investment capacity to duplicate the local network. Therefore, they must be allowed to use the

incumbents' local loop".44 "This will lead to lower local tariffs. And it will speed up the provision of

42 Subsequent to a cable review completed in 1998, the Commission adopted in June 1999 an Art 86 Directive under

its antitrust powers mandating the legal separation of cable networks from the incumbent telephone companies'networks. This was seen as a minimal condition for developing cable networks towards broadband Internet access.The measure resulted subsequently in partial sale-offs of cable networks by incumbents, or the announcement ofplans to do so, by a number of incumbents in EU Member States, in particular by DT and FT, the German andFrench incumbents. See "Commission Communication concerning the review under competition rules of the jointprovision of telecommunications and cable TV networks by a single operator and the abolition of restrictions on theprovision of cable TV capacity over telecommunications networks", OJ C 71 (1998), and Commission Directive1999/64/EC of 23 June 1999 , OJ L 175/ 39 (1999). Available at <http://www.europa.eu.int/cgi-bin/eur-lex/search_oj.pl>.

43 The European Commission promoted energetically the development and deployment of broadband mobilecommunications systems (referred to as "Third Generations Systems"(3G systems), or, in Europe, as "UniversalMobile Telecommunications System " (UMTS)), building on its success in the deployment of the GSM mobilesystem in Europe. By Spring 2000 a number of UMTS licences had been allocated (e.g. Finland, UK), and thelicensing process was underway or planned in others (e.g. Germany, France, Spain). The main motivation was toprepare Europe's mobile system for the Internet age.

Erkki Liikanen, European Commissioner responsible for Enterprise and the Information Society : "Europe ismoving towards the knowledge-based economy. And Europe will have a strong position in some key areas. One ofthem will be the mobile Internet. Europe is the undisputed world leader in mobile communications ...There arealready some 140 million mobile users in Europe — that's over one-third of the EU population...New innovativeservices are rapidly gaining momentum, in particular WAP services and m-commerce. And this gives us only aforetaste of what third-generation — or 3G -mobile systems — have in store for us : the mobile broadbandInternet", in "Is there a third way for the Internet in Europe?", speech delivered at Global Internet Summit,Barcelona, 22 May 2000. Available at <http://www.europa.eu.int>.

44 Erkki Liikanen, Barcelona, 22 May 2000, ibid.

23affordable high-speed services based on DSL technologies"45 (emphasis added).

Given the short-term requirement to speed up large-scale deployment of Internet access at affordable

rates in Europe, and to open up development towards high-speed multimedia Internet applications, the

Commission chose a two-pronged approach :

- immediate action with regard to unbundling the local loop46, developing further the combined

use of "soft law" under sector regulation and of antitrust, which had already been successful in

tackling interconnection rates in Europe.

- commitment to broad reform, in the context of the 1999 review47, of the access

framework, and the close integration of sector regulation and antitrust principles, particularly of

the market definitions used under both frameworks.

_________________________________________________________________________________(cont'd)

It should be noted that access to (unbundling of) the local loop of the Bell Operating Companies and theirsuccessors (subsequent to the merger wave following the Telecommunications Act of 1996) has been a prevailingissue in the US. For a recent analysis of the complex trade-offs between the common carrier tradition in UStelecommunications regulation and the maintenance of investment incentives for both telephone and cablecompanies see John C.B. LeGates, "Open Access in the Local Telephone Loop : A Grand Tour of the EntangledIssues", Program on Information Resources Policy, Center for Information Policy Research, Harvard University(April 2000, Incidental Paper). Available at <http://www.pirp.harvard.edu>.

Note also the continuing debate in Japan on the access conditions to NTT's local network.

45 Erkki Liikanen, ibid. DSL (Digital Subscriber Loop) is a family of technologies allowing to upgrade the normaltelephone wire to high speed access.

46 See Commission press release, "Commission acts to liberalise the 'last mile'. Local loop unbundling will boost high-speed Internet access" (IP/00/408), 26.4.2000 . "Commissioners Liikanen and Monti declared that 'the local accessnetwork' remains one of the least competitive segments of the liberalised telecommunications sector . The measuresaddressed by the Commission to Member States on unbundled access to the local loop will help stimulatecompetition in the local access network, giving businesses and consumers access to an affordable advancedcommunications infrastructure and a wide range of services".

47 See "Towards a new Framework for Electronic Communications Infrastructure and associated services",COM(1999)539, supra, and "Results of the public consultation" , COM(2000)239, supra.

24With regard to the first, the Commission issued a Recommendation48 (i.e. soft legislation) and a

communication49 updating its approach to obligations under EU antitrust law for providing access to

unbundled network elements.50 The intention was to establish a fast-track procedure towards

unbundling , by using a soft law approach under the form of a recommendation directed at the NRAs

(the national regulators) and the incumbent telecommunications operators, but at the same time making

it clear that the Recommendation would be used as a measure in proceedings under Articles 81/82 TEC

establishing abusive behaviour, or, more particularly, refusal of access to an essential facility51.

The Recommendation recommended implementation of full unbundling for 31 December 2000 at the

latest. The Communication, building on the Access Notice discussed previously52went to some detail on

certain aspects, in order to integrate conclusions from the "Bronner Judgment",53 in which the European

Court of Justice had made it clear that it would favour a narrow interpretation of the essential facilities

doctrine in Europe, in order to safeguard investment incentives.

_________________________________________________________________________________(cont'd)

48 Commission Recommendation on Unbundled Access to the Local Loop, C(2000)1059, 26 April 2000. Available at<http://www.europa.eu.int/comm/information_society/policy/telecom/index_en.htm>.

49 Communication from the Commission : "Unbundled Access to the Local Loop, COM(2000)237, 26 April 2000.Available at <http://www.europa.eu.int/comm/information_society/policy/telecom/index_en.htm>.

50 Permitting "unbundled access to the local loop" is defined as "allowing other operators to use, partially or fully, thelocal loops installed by incumbent telephone operators, enabling them to install new cost-effective technologies suchas DSL (Digital Subscriber Loop). Under full unbundled access to the local loop new entrants would have fullcontrol of the commercial relationship with their customers, and in this way , new market entrants would be able todeploy all type of new technologies and to provide competitive services to consumers, including new broadbandservices." "This will facilitate the deployment of high speed Internet services." See IP/00/408, supra.

For a recent discussion of options for the "bottom-up" development of the local loop particularly in the local andmunicipal area see Deborah Hurley and James H. Keller (eds.), The First 100 Feet, Options for Internet and BroadbandAccess (The MIT Press Books, 1999). See <http://www.ksg.harvard.edu/iip/>.

51 It should be noted that a number of Member States have already undertaken, or announced, unbundling of the localloop.

52 See Chapter II.53 Case C-7/97, supra. The case concerned access to home delivery services for print media by a competitor.

25The Communication argued54 that the "incumbents' local network are the only networks which have

been developed nation-wide in each of the Member States".55 The Communication described in some

detail why the case of unbundling satisfied the Bronner test , in particular56 :

- "Given the size of the investment required, the absolute cost of nation-wide duplication of the

incumbents' network with a similar population coverage is likely to be a barrier to entry for any

competitor. This infrastructure appears to be with present technologies economically

unfeasible57, or unreasonably difficult to duplicate at a nation-wide level, in a reasonable time

period".

- "A refusal from an incumbent to give access to competitors on its local loop is thus likely to

eliminate the possibility for new entrants to compete at all on the nation-wide market58".

The Communication re-emphasised a number of principles resulting from EU competition rules (set out

in the Access Notice) with regard to the conditions of access , in particular those concerning delays,

discrimination, and price abuses.

Without going into further detail, it was made clear that with the introduction of soft legislation on a key

issue for access to the future Internet infrastructure in the EU, the Commission favoured a shift away

54 The Commission also found that the telephone networks of the incumbents "still deliver the bulk of access services

to end-users — the connection and the line rental — and held a share of the local call market which, except in theUK, is well above 90% and in most cases close to 100%".

55 Communication supra, chapter 3.2

56 Ibid. , chapter 3.2

57 Cf Bronner, par 44

58 Ibid., par 38

26from traditional telecom regulation towards a more flexible scheme59, while , with the emphasis on

antitrust action to offer remedy in case of non-compliance, it initiated a gradual shift towards basing the

future regulation of the sector on EU competition law principles.

This became even clearer in the announced shift of emphasis for the general reform60, as put forward in

59 Though the Commission did not exclude at the time that a firm regulatory obligation would be introduced

subsequently in the final regulatory package.

Indeed, the package of legislative proposals, as announced on 12 July 2000 (supra), included the proposal of a(directly applicable and binding) Regulation to enforce unbundling in all EU Member States by 31 December 2000.The statement published referred to the soft law approach announced in April but stated that "since then [...] it hasbecome increasingly apparent that , despite progress made in some Member States, non-binding measures areunlikely to achieve local loop unbundling on a sufficiently harmonised basis across the EU by 31 December 2000".The Regulation is based on Article 95, TEC, and requires approval by the European Parliament and Council to enterinto force. See press release "Commission proposes unbundling local loop by end of year" (IP/00/750), 12.7.2000. Available at <http://www.europa.eu.int>.

With this proposal, it became clear that inspite of the preference for a more flexible approach the Commission would not hesitate to back up "soft legislation" with "hard" law measures in case of need, especially during thecritical current transition towards full effective competition in all segments of the EU's telecommunications market.

60 At Global Internet Summit, 24 May, supra, Commissioner Liikanen defined the goals of the review and theoutcome as follows : "First, simplify and clarify the existing framework — bringing the number of regulatorymeasures down to 6 from currently 20 ; second, introduce greater flexibility in the framework — by relying moreheavily on accompanying non-binding measures ; third, adapt the 1998 telecoms framework in the light of technology and market development ; four, introduce greater competition, in particular in the local loop. Ascompetition grows further, it will be possible to rely increasingly on competition rules."

The package of legislative proposals finally anounced on 12 July 2000 followed these lines. The package aims atconsolidating the existing EU telecommunications legislation into a more limited number of directives. The pressrelease published on that occasion stated that the new regulatory framework would "significantly simplify and clarifythe existing regulatory framework ...". The proposed consolidated framework comprises :

- "Five harmonisation Directives, including a Framework Directive and four specific Directives onauthorisation, access and interconnection, universal service and user rights, and data protection intelecommunications services [essentially consolidating the current ONP directives (see Chapter II), andcertain measures applying to television standards and protection of privacy in telecommunications].

- A Regulation on the unbundling of the local loop [supra].- A draft Commission Liberalisation Directive [consolidating the existing Article 86 Directives issued under

EC Competition Law (see Chapter II)].- A Decision on Community radio spectrum policy.

See COM(2000)393 (Framework), COM(2000)386 (authorisation), COM(2000)384 (access and interconnection),COM(2000)392 (universal service and user rights), COM(2000)385 (data protection and privacy), COM(2000)394(unbundling), COM(2000)407 (radio spectrum), available at<http://europa.eu.int/comm/information_society/policy/framework/index_en.htm> and Draft CompetitionDirective consolidating existing Directives on Competition in the Telecommunications Markets, 12.7.2000, available at<http://ww.europa.eu.int/comm/competition/whatsnew.html>.

27the general Communication on the consultation on the 1999 review.61

The central shift of emphasis concerns access and interconnection obligations. The Commission

proposed to change the cornerstone of the current framework by modifying "the concept of significant

market power and [using] it as the underlying concept for imposing ex-ante obligations relating to access

and interconnection. In particular the market share threshold of 25% would no longer be part of the

definition. Instead, the definition would be based on the concept of dominant position in particular

markets, calculated in a manner consistent with EC competition law practice, as a trigger for the heavier

ex-ante obligations , and would cover all aspects including joint dominance and leverage of market

power into associated markets"(emphasis added)62

In practice this would mean that in the future, the basis of sector-specific regulatory intervention would

be application of antitrust theory, at least as far as market definitions and the determination of market

power are concerned. The approach would eliminate a major potential source of conflict between the

current approach under EU-sector regulation and the antitrust approach concerning access to the

_________________________________________________________________________________(cont'd)

See press release "Commission proposes overhaul of rules for electronic communications" (IP/00/749), supra. Commissioner Erkki Liikanen confirmed on the occasion the previously set goals. He stated : "Less regulation, easiermarket entry and a level playing field across [the] EU are prerequisites for development of world classtelecommunications and Internet services in Europe ...".

61 Communication on the results of the public consultation COM(2000)239, 26 April 2000, supra.

62 Ibid., chapter 3.3.

The proposed legislative package (supra) confirmed this approach. It said that "the definition of significant marketpower [...] now needs to be adapted to suit more complex and dynamic markets, and for this reason is beingmodified to be based on the concept of dominance as defined in the case law of the Court of Justice and the Courtof First Instance of the European Communities". See "Proposal for a Directive of the European Parliament and ofthe Council on a common regulatory framework for electronic communications networks and services",COM(2000)393, 12 July 2000, point 20. Available at<http://europa.eu.int/comm/information_society/policy/framework/index_en.htm>.

Articles 13 and 14 of that proposed Directive (the new Framework Directive) set out principles and market analysisprocedure to further detail.

28communications infrastructure63. At the same time, this more flexible approach, based on analysis of

actual market power, would seem to open the way towards a potentially more generalised application of

access obligations, and their application also to higher levels of access, beyond the basic

telecommunications infrastructure. The growing convergence of the communications markets and the

resulting requirement for a more flexible framework have made this rebalancing towards (the more

generalised) antitrust principles inevitable.

Given the close relationship between the EU's ONP (sector regulation) framework and its obligations

under the WTO telecommunications "Regulatory Annex"64, it will be interesting to see how the concept

of "major supplier" in that Annex will be interpreted in the future.

The "major supplier" concept is the basic concept concerning access and interconnection obligations

entered by all parties which have committed to the "Regulatory Annex" under the WTO basic telecom

agreement.65 The Annex states in particular66 : "Interconnection to be ensured : Within the limits of

permitted market access, interconnection with a major supplier will be ensured at any technically feasible

point in the network....". The commitments have been in particular entered into by the US, Japan and

the EU. Common efforts will be required to ensure common interpretation, as access concepts evolve.

63 It will be interesting to see how a number of consequences of this major change will be tackled. In practice,

arrangements will have to be worked out at the enforcement level between sector-specific entities and antitrustauthorities — both at the EU and the national level, particularly concerning market definitions and determination ofdominant positions

64 WTO Basic Telecoms Agreement. "Additional Commitments" taken in the schedules committed to by a number ofcountries, inter alia the US, Japan, and the EU, also known as the "Reference Paper", supra.

65 WTO : EU Additional Commitments , supra, point 2.

66 Ibid, point 2.2

29

IV) GOING GLOBAL : ACCESS TO TOP-LEVEL CONNECTIVITY IN GLOBAL MARKETS

While securing access to the basic telecom infrastructure is the very basis for ensuring access to a global

network, though it falls under national regulatory approaches67, access to "top-level connectivity" has

turned out to be a phenomenon that can only be analysed in a global context and with a global market

definition.

In the EU, access to "top-level Internet connectivity" was investigated for the first time to substantial

detail in the Worldcom-MCI case. 68

The investigation was carried out under the EU merger regulation69. It focussed on concerns "about the

parties' combined market share in relation to the supply of Internet backbone services"70.

67 Though national regulatory approaches are correlated to a substantial extent via the obligations to ensure access

taken under the WTO Basic Telecommunications Agreement, supra.

68 The case concerned a merger between WorldCom, Inc and MCI Communications Corporation (MCI). The twocompanies were described as "US-based international telecommunications companies offering a range of servicesincluding telecommunications services and Internet services"(IP/98/213), infra.

Commission press release "Commission to carry out detailed inquiry into proposed merger between WorldCom andMCI" (IP/98/213), 4.3.1998Commission press release "Commission clears WorldCom and MCI merger subject to conditions" (IP/98/639),8.7.1998Available at <http://www.europa.eu.int>.

99/287/EC : Commission Decision of 8 July 1998 declaring a concentration to be compatible with the commonmarket and the functioning of the EEA Agreement (case IV/M.1069 - WorldCom/MCI), OJ L 116 , 4.5.1999 p.1 -35, hereafter referred as the Decision.Available at <http://www.europa.eu.int/comm/dg04/merger/closed/en/dec98.htm>.

69 Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings, OJ :395, 30.12.1989,p.1; corrigendum OJ L 257,21.9.1990,p.13, as last amended by Regulation (EC) No 1310/97, OJ L180, 9.7.1997, p.1. Available at <http://www.europa.eu.int/comm/dg04/lawmerg/merger.htm>.

70 Press release, supra. The Commission found significant overlaps in this market .

30In the course of the investigation the Commission identified for the first time the hierarchical market

power structure and the effect of network externalities in the Internet to substantial detail — a finding

quite contrary to the beliefs that the Internet is by nature a highly distributed structure.71

As described in the Decision, as the NSF72 withdrew in the mid-nineties from financing the Internet

backbone, private companies took over the role of supplying the underlying long-distance lines that link

the different networks in the "inter-net". Some of the initial regional networks began to operate as

"Internet Service Providers" (ISPs), offering access services on a commercial basis to paying

subscribers. "From the time of withdrawal of the NSF, the Internet could no longer be regarded as a

hierarchy of networks joined by a single unifying backbone, but as a number of networks connected to

different backbones requiring mutual interconnection if the dependent networks (or ISPs) were to be

able to continue sending traffic to each other".73

As a consequence, the commercial operators of the network split into two groups : a highly concentrated

leading group of backbone providers which "peer" (interconnect on a traffic exchange basis74), and

those who pay access charges75 to this "top-level" group of companies who "can provide connectivity

anywhere on the Internet solely through their own peering agreements with other network ...76

71 In fact, during the investigation the parties argued that the "Internet was originally conceived to be non-hierarchical

in form , in order to avoid the strategic vulnerabilities associated with network architectures based on centralised andhierarchical switching and tiered structures." Decision, point 50. It should be recalled that the original Internetdeveloped out of the Arpanet during the sixties, sponsored under US Defence programs.

72 National Science Foundation. See "Brief History of the Internet", Chapter I.

73 Decision point 23, supra

74 I.e. settlement- or payment-free.

75 Called "transit" arrangements and transit charges.

76 I.e. agreements with other network operators for mutual termination of traffic.

31without having to rely on the purchase of a 'transit' service from any provider".77 The investigation

established that the difficulty for the smaller networks in obtaining peering with the top-level networks

meant that "the number of ISPs who enjoy the status of top-level networks is kept relatively small". 78

The investigation defined the relevant market as the market for the provision of "top-level " or

"universal" Internet connectivity. This market was found to be effectively a global market.

The major issue that emerged during this investigation was the finding that the Internet was controlled

by a highly concentrated group of providers dominating that market,79 quite independent from the

geographical location of their physical backbones.

The Commission also found that the parties would through their merger hold over 50% of that market

on the basis of the chosen methodology for market sizing and for share based on revenue and traffic

flow.80 It concluded that the merged entity 81 "would control market entry by denial of new peering

requests, foreclosure or the threat of foreclosure of peering agreements and/or their replacement with

paid interconnection"82.

Without going into further details of the case83, three points should be made :

77 IP/98/639, supra. See also explanation of top-level networks in Decision, point 41, supra.

78 Decision, point 45, supra

79 By the time of the investigation the following "big four" were named to having a position stronger than all others inthis market : WorldCom, MCI, Sprint and GTE/BBN. See Decision, point 102.

80 Decision , point 114

81 I.e. MCI/WorldCom

82 Decision, point 119

83 The investigation concluded that in the absence of competitive constraints and effective potential competition themerger would "if not altered, lead to the creation of a dominant position in the market for the provision of top-level

32

- the definition of a global market for Internet connectivity and the critical role of access to that

connectivity84 was recognised for the first time as a central concept.

- the investigation pinpointed one of the core changes in the Internet economy, which has been

dubbed "winner take most"85 : "The merger might well create a 'snowball effect' , in that MCI

Worldcom would be better placed than any of its competitors to capture future growth through

new customers, because of the attractions for any new customer of direct connection with the

largest network, and the relative unattractiveness of competitors' offerings owing to the threat of

disconnection or degradation of peering which MCI/Worldcom's competitors must constantly

live under"86 (emphasis added). It has been suggested that in the world of the New Economy,

"the avalanche, rather than the thermostat becomes the more attractive metaphor for economic

_________________________________________________________________________________(cont'd)

or universal Internet connectivity", Decision, point 135.The merger was cleared on the basis of structural remedies offered by the parties, i.e. "their commitment to divestingMCI's Internet assets, thus eliminating the overlap with WorldCom's Internet business" , Press release IP/ 98/639,supra.

84 The central role of top-level connectivity as a future concept was re-confirmed on the occasion of the subsequentnotification and investigation of the planned MCI WorldCom / Sprint merger . "The Commission has raised seriousdoubts as to the compatibility of the proposed merger between MCI WorldCom and Sprint mainly because of itsimpact on competition in the market for top-level Internet connectivity" . See Commission press release,"Commission opens full investigation into the MCI WorldCom / Sprint merger" (IP/00/174), 21.2.2000. Availableat <http://www.europe.eu.int>.

On 28 June 2000, the Commission prohibited the merger "as it would have resulted in the creation of a dominantposition in the market for top-level universal Internet connectivity." "An in-depth investigation by the Commissionshowed that the merger would, through the combination of the merging parties' extensive networks and largecustomer base, have led to the creation of such a powerful force that both competitiors and customers would havebeen dependent on the new company to obtain universal Internet connectivity." The investigation was carried out inclose cooperation with the US Department of Justice. See "Commission prohibits merger between MCI WorldComand Sprint" (IP/00/668), 28.6.2000. Available at <http://www.europe.eu.int>.

85 Ken Fox, quoted in Wall Street Journal, 9 June 2000, supra.

86 Decision, point 131

33policy".87

- investigation and enforcement in the global Internet market requires cooperation on antitrust

policy closer than ever before. In the WorldCom/MCI case there was an exchange of letters 88,

"whereby the Commission requested the DoJ's cooperation regarding the undertakings which

were mutually offered to both the Commission and the DoJ. The DoJ confirmed that it will take

whatever steps are necessary and appropriate to evaluate, and if it finds them to be sufficient, to

seek the effective implementation of these undertakings"89.

A similar announcement of close cooperation was made for the subsequent MCI-WorldCom/Sprint

case90.

Given the strong network externalities of the New Economy, access to global connectivity is bound to

become a major and permanent issue in international antitrust. Many layers of the Internet are potential

bottleneck candidates. A well-known example is access to the Internet address space, the logical core of

the Internet and the root servers91. Other effects of high concentration of market power at the "top-

87 Treasury Secretary Lawrence H. Summers in "The New Wealth of Nations", 10 May 2000, supra.

88 Between the Director-General of the Directorate-General for Competition and the Assistant Attorney General incharge of the Antitrust Division, United States Department of Justice (DoJ), in accordance with Article IV of theAgreement between the European Communities and the Government of the United States of America regarding theapplication of their competition laws. See Agreement, OJ L 95, 27.4.1995, p.47. Available at <http://www.europa.eu.int/eur-lex/en/index.html>.

89 Decision, point 164

90 See press release IP/00/174, supra.

91 The root servers are the basis for routing calls (packets) via the Internet. Originally, the top root servers wereoperated under a contract between the US Department of Commerce and academic and private institutions, inparticular Network Solutions Inc., a private company.

Subsequent to the publication of a White Paper , a non-profit organisation was set up under Californian law, underan agreement with the US Department of Commerce (ICANN — Internet Corporation for Assigned Numbers andNames). It started to introduce competition into the allocation of "top domain names" (the dot.com , dot.gov ,

34level" may be seen at the level of the so-called certification and trust services92, the billing and payment

systems currently being built up to underpin worldwide transactions for e-commerce via the Internet

both by existing credit card companies and others, and of course in the well-known case of browser

access software. Even in the e-commerce field — on top of the Internet proper — which is generally

seen as an area of low entry costs and therefore highly competitive, strong externality effects may start

to work, and global access issues may arise. On-line auction markets may become an example,93 while

Business-to-Business (B2B) exchanges grouping major companies at a global level for negotiating supply

and demand may become another case in point.

Given the global and pervasive nature of the Internet, which in many cases will void national market

definitions of real meaning, coordination in investigation and enforcement of antitrust will be vital.

Developing common principles in international antitrust in dealing with the New Economy effects will

have to become a first-priority issue. The issue is complicated by the fact that in a number of cases the

_________________________________________________________________________________(cont'd)

dot.org, dot.net, dot.edu, dot.int, etc) and of Internet address blocks. In spring 2000, the top root server, the physicalbasis for implementing the address space, and related data bases (e.g. the WHOIS data base) were still operated byNetwork Solutions Inc. (NSI) which was taken over in a major deal by Verisign Inc, a major actor in Internet trustand certification services. See United States Department of Commerce, "Management of Internet Names andAddresses, Docket Number : 980212036-8146-02, 6.5.1998 DNS Statement of Policy. Available at<http://www.ntia.doc.gov./nttiahome/domainname>. For an account of the development of the management ofInternet Domain Names and related issues see Milton Mueller, "Technology and Institutional Innovation : InternetDomain Names", International Journal of Communications Law and Policy (Issue 5, Summer 2000). Available at<http://www.ijclp.org>.See also ICANN web site available at <http://www.icann.org> and Berkman Center for Internet Society at HarvardLaw School, available at <http://www.law.harvard.edu/programs/center_law/>.

For a recent overview of the discussion of Internet governance issues see Ch.Marsden, "Information andCommunications Technologies, Globalisation, and Regulation" in Marsden, C. ed. (2000), Regulating the GlobalInformation Society (Routledge, London), chapter I.

For an EU position on ICANN related issues see Communication from the Commission to the Council and theEuropean Parliament, "The Organisation and Management of the Internet / International and European PolicyIssues 1998 - 2000 COM(2000)202. Available at<http://www.europa.eu.int/comm/information_society/policy/telecom/index_en.htm>.

92 Certification and trust services guarantee the security of transactions via the Internet.

93 Alan Murray in Wall Street Journal, 9 June 2000, supra : "EBay Inc. dominates the online-auction market because it isthe biggest. Sellers go there to reach the most buyers ; buyers go there to reach the most sellers".

35development of innovative markets passes through a temporary strong market position or monopoly

by lead actors94. In many cases antitrust regulators will search for an optimal mix of structural and

behavioural remedies, in order to guarantee the development of competitive market structures on the

one hand, and the fair remuneration of the innovator's high-risk investment (the motor of the New

Economy) on the other.95 Antitrust decisions of the future will have more and more global implications

and will raise increasingly complex global enforcement issues. Securing access to all levels of the new

networked economy for market actors will be in the focus of international antitrust development.

_________________________________________________________________________________(cont'd)

94 A well-known problem in the Intellectual Property Rights field.

95 Recent regulatory and antitrust decisions tend to be a mix of structural and behavioural measures.In the case of the Vodafone Airtouch/Mannesmann merger in the mobile communications sector, the largest mergerever, the European Commission requested divestiture of mobile networks in two national markets to eliminateoverlap ; it accepted undertakings by Vodafone Airtouch aiming at enabling third party non-discriminatory access tothe merged entities integrated network, so as to respond to the Commission's serious concerns about access forcompetitors to the market for competitive seamless pan-European mobile services. Undertakings were limited tothree years, given the roll out of third generation mobile (3G) networks and the expected growth of real alternativesto Vodafone/Airtouch's network footprint. See press release "Commission clears merger between VodafoneAirtouch and Mannesmann AG with conditions" (IP/00/373), 12.4.2000. Available at <http://www.europa.eu.int>. Decision : Case No COMP/M.1795 - Vodafone Airtouch/Mannesmann, 12.4.2000. Seepoint 58. Available at <http://www.europa.eu.int/comm/dg04/index_en.htm>.

A similar line was taken in major cases on local access concerning cable networks. In the Decision on the Telia /Telenor merger concerning the telecom incumbents in Sweden respectively Norway — later abandoned by theparties — the Commission accepted a number of divestiture commitments, in particular of the cable TV networksin Sweden and Norway, and requested, in addition, access commitments (local loop unbundling) in both countries.On the occasion it stated that "the Commission will have a very close look at access to local telecommunicationsand cable TV networks when assessing any future notifications of mergers or joint ventures between thoseincumbent operators. It may be the case that the Commission will again require cable TV network divestituresand/or local loop unbundling in future cases in order to resolve competition issues." It continued, "this policy isconsistent with the line taken in the Cable Review in 1998, where legal separation as the minimum was requiredbetween cable TV networks and Telecommunications networks owned by the same incumbent operator". See Chapter III and Commission press release IP/99/413 , 13.10.1999 .

See also recent FCC (Federal Communications Commission) decision on the AT&T/MediaOne merger, where theFCC insisted on divestitures in order to decrease the effect of the merger on the cable TV market, and noted that itexpected "AT&T to fulfil its voluntary commitments to give unaffiliated Internet service providers (ISPs) access toits cable systems to provide broadband services to consumers". It also noted "that AT&T has entered a proposedconsent decree with the U.S.Department of Justice, which requires the merged firm to divest its interest in the cablebroadband ISP Road Runner and to obtain Justice Department approval prior to entering certain types ofbroadband arrangements with Time Warner and America Online".

36V) CONCLUSIONS

Access issues in the New Economy are bound to grow in importance. Services often involve very large

upfront investments, be it in networks, organisation, or brand building, but often involve low

distribution costs. According to commentators, 96 "in such business it is inexpensive to expand rapidly

into a dominant position, and dangerous [from the company's perspective] not to".

Quite contrary to many of the beliefs of Internet libertarians who count on low costs of entry and a

robust competitive environment, many segments of the new Internet-based economy — driven by the

any-to-any principle, and the requirement in many instances to show worldwide presence to reach scale

economies — could develop towards structures controlled by highly dominant enterprises. While the

current concentration of much of the Internet economy in the US97 still may allow tackling certain of

these effects in a national framework, as does the localised nature of the local access layer of the

Internet, the implications of measures taken will in many cases be global.

This paper has limited itself to discussing briefly two layers directly related to the Internet : the issue of

local telecom access, and the issue of access to global Internet connectivity. In the first instance, as

developments in the European Union show, convergence and the emergence of the new Internet

markets will make antitrust considerations increasingly important. Approaches taken on local access are

now linked into a multilateral framework, given the obligations the US, Japan, the European Union and

96 Alan Murray in Wall Street Journal, 9 June 2000, supra.

97 "The Internet traffic currently originates disproportionately from the United States, where the large majority of websites are based. Most web pages are in English and most of them are hosted in the United States. Of the 100 mostvisited web sites, 94 are located physically in the United States", (emphasis added ). See Commission press release"Commission proposes programme to stimulate presence of European digital content on the Internet" (IP/00/513),24.5.2000. Available at <http://www.europa.eu.int.>.

37others have taken under the WTO Basic Telecommunications Agreement98.

In the second instance, bilateral antitrust cooperation, such as that within the US/EU agreement, was

the only way to come to common positions in tackling the antitrust issues involved.99 In all cases, at this

stage of development of the world market, the members of the triad US/Japan/EU will be primarily

called upon to act because together they currently account for 75% of the world's Internet access.

This paper has not addressed other main issues involved in Internet access where "top-level"100 effects

could develop. One set of issues are the platforms formed in business-to-business (B2B) e-commerce

between major suppliers or buyers with a global impact. Others concern access to content. One of the

main issues in the major current antitrust case in the US concerns control of the access software to the

World Wide Web. In all of these areas more international cooperation and coordination will be needed

to define common principles in market definitions and remedies, as well as in enforcement. In many

cases, the implications of decisions will be global.

As stated by European Commission President Prodi, the Commission follows "a focused strategy to

address the key barriers to the further uptake of the Internet in Europe and ensure that the framework

conditions are established for a decisive move towards the new knowledge-based economy"101. A global

Internet economy will need a global view of antitrust and its enforcement mechanisms. Suffice it to say

in conclusion that the Internet and the New Economy have the promise of more competition and more

consumer benefit. But as with any promise, it must still be realised. Global cooperation on antitrust will

98 See Chapter III.

99 See Chapter IV.

100 See Chapter IV.

101 Commission President Romano Prodi in "Commission proposes ambitious eEurope Action Plan", press release(IP/00/514), 24.5.2000. Available at <http://www.europa.eu.int>.

38be a major element in that realisation.